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Ask Larry: Will I Lose COLAs If I Wait Till 70 To Claim My Social Security Retirement Benefits?

Social Security may be one of your largest assets. What and when you collect will make a huge difference to your lifetime benefits.

Today’s column addresses questions about whether COLAs are lost when delaying filing, filing strategies with a young child, how survivor benefits are calculated, when spousal benefits can be filed for and whether to let Social Security know about a change in earnings estimates. Larry Kotlikoff is the founder and president of Economic Security Planning, a company that markets Maximize My Social Security, a Social Security benefits calculator referred to in this post.

See more Ask Larry answers here.

Ask Larry about Social Security:

Will I Lose COLAs If I Wait Till 70 To Claim My Social Security Retirement Benefits?​​

Hi Larry, If I wait to claim retirement benefits until 70 instead of claiming at my FRA next month, do I forfeit the COLAs that would be applied each year until 70 if I do file at my FRA? Thanks, Roger

Hi Roger, Whether or not you wait until 70 to file for retirement benefits, your benefit rate will be credited with any Social Security COLAs that occur starting with the year you reach 62. And if you wait until 70 to start drawing your retirement benefits, delayed retirement credits (DRCs) will add an additional 24% to 32% to your benefit rate depending on your full retirement age. Best, Larry


What Would Be The Best Strategy For Our Family?​​

Hi Larry, I was born in 1956 and my wife in 1959. We have a 12 year old child. Both of us have worked our entire lives, though we don’t really need Social Security to cover our daily expenses. What would be our best Social Security strategy? Both of us are retired and have pensions and other retirement assets. Thanks, Clarence

Hi Clarence, One strategy that you should probably at least consider would be for you to file for early retirement benefits and have your wife and child file for auxiliary benefits on your record. However, the downside of that strategy would be that your benefit rate would be permanently reduced, which could also potentially limit the rate of widow’s benefits that your spouse would receive if you were to die before her. The obvious upside would be that you and your family would start drawing benefits sooner if you file early.

Since you are over 62, you could file for reduced retirement benefits as early as this month. Whether or not that would be your best strategy depends largely on your and your wife’s relative benefit rates, as well as your personal preferences. An expert Social Security benefits calculator as described in other answers can help you to weigh the pluses and minuses of your various filing options in order to identify the best overall plan for your family. Best, Larry

Can My Wife Get Survivor Benefits And Draw Her Own Social Security?​​

Hi Larry, Will my wife be able to get Social Security survivor’s benefits and draw her own Social Security retirement benefit at the same time when the time comes? Thanks, Pete

Hi Pete, Your wife couldn’t be paid her own Social Security benefits and a full widow’s benefit at the same time. The most she could receive is the higher of those 2 benefit rates. If the survivor rate is higher, she would be paid her own benefit rate plus an excess survivor’s rate equal to the difference in the two rates. That way, her widow’s benefit would be equal to what you were either receiving or would have been entitled to at the time of your death if you die after your full retirement age. Best, Larry


Can I File For Spousal Benefits Now?​​

Hi Larry, After not having worked for 20 years, I began drawing my Social Security retirement benefits at 62 while my husband began his benefits at his FRA. I unexpectedly went back to work at 64. My husband is also still working. I May I now file for spousal benefits? Would I get half of his? Or is there a better scenario for us? Are spousal benefits calculated on a benefit before Medicare is deducted or after? Thanks, Andrea

Hi Andrea, You can apply for spousal benefits, but you’ll only be eligible if 50% of your husband’s Primary Insurance Amount (PIA), which is equal to his full retirement age (FRA) retirement benefit amount, is higher than your own PIA. And if you apply for spousal benefits before full retirement age (FRA), your spousal rate would be reduced for age and could be fully or partially withheld if you earn too much due to Social Security’s earnings test.

All Social Security benefits are calculated before any withholdings are applied. So to determine if you qualify for spousal benefits, your PIA prior to any deductions or withholdings would be compared to 50% of your husband’s PIA before any deductions or withholdings.

By the way, the only way that you could have filed for your own benefits at age 62 and not be deemed to have also applied for spousal benefits is if you became entitled to your benefits before your husband became entitled to his benefits, and if you were born prior to 1/2/1954. If that’s true in your case, you would have the option of waiting until FRA to file for unreduced spousal benefits. You may want to consider using an expert Social Security benefits calculator, such as Maximize My Social Security or other top-rated software to explore and compare your options in order to determine your best strategy. Best, Larry


Do I Need To Contact Social Security To Let Them Know That I’m No Longer Working?​​

Hi Larry, I am 63 and presently working but signed up to begin my Social Security retirement benefits in January. My income for the year would have been well over the exempt amount I could earn without a penalty and so they are suspending my benefits. But I decided to retire earlier than I originally planned and I actually stopped working before I reached the limit. Do I need to contact SSA to let them know that I am no longer working and to not suspend my benefits? Thanks, Sherry

Hi Sherry, Yes, it certainly sounds like you should contact Social Security to amend your earnings estimate as soon as possible. If you change your estimate to an amount below the limit, Social Security will refund any benefits that were previously withheld as soon as possible. You don’t need to wait until 2020 to correct your estimate and receive any suspended benefits. Best, Larry

To learn more about your Social Security options, visit Economic Security Planning, Inc.

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